In his address to the Institute of Directors in Sydney, California’s ex-film star Governor pleaded for all to fight for freedom in the marketplace and resist bureaucratic interference.
Introduction to Governor Reagan’s address by Sir Robert Crichton-Brown: Many of you may recall the outstanding speech the Honourable Ronald Reagan made to the annual conference of the Institute of Directors in London in 1969 when he received a standing ovation.
Governor Reagan, whose face and name are well known to most of us, began his career as a radio sports announcer before moving into films in 1937. His film career was partly disrupted by World War II when he served in the US Army Air Force, rising to the rank of captain. After the war, he continued in films but became progressively preoccupied with television.
In all, he appeared in some 50 feature films and two television series. In 1965, he directed his energies to politics, in which he had always taken a keen interest, and in the following year, as Republican candidate, won election as Governor of California by a wide margin.
He took office in January 1967 for a four year term, had the happy experience of finding that he was even more popular in office and was elected for a second term.
Governor Reagan is in Australia as part of a tour to several countries in South-East Asia as a Special Presidential Representative for the promotion of US Exports.
This is the “substance of an address by Governor Ronald Reagan to the Institute luncheon on November 26 1973”, as described and published in The Australian Director: The Journal of the Institute of Directors in Australia, vol 4, no 1, February 1974, pages 12-20:
It is a great pleasure for my wife and myself to be in what I will have to call the queen city of Australia because you are the sister city of our queen city in California, San Francisco. Your warm welcome, and the great bond that exists between our two peoples makes it doubly important to me that what I say should be the right thing and should be said in the right way.
Every speaker lives with the fear his remarks may not be well-received. A little over a year ago, Nancy and I were in Mexico City where I spoke to a large and distinguished audience and had that thing happen that always you dread.
I sat down to very scattered and unenthusiastic applause. I was not helped any in my discomfort by the fact that the next man, a representative of the Mexican Government, speaking in Spanish, was receiving applause at virtually every line. I did not understand what he was saying but I wasn’t going to show my embarrassment; so when they started to clap, I clapped — and I clapped louder and longer than anyone till our Ambassador leaned over and said to me, “I wouldn’t do that if I were you — he is interpreting your speech.”
I’m grateful to your Red Cross because it was through your Red Cross, and the opening of their drive here, that we were invited to make this first visit to your great country. I have a great admiration for all of those people — whether for the Red Cross or for any good cause or charity — who work to support philanthropic efforts.
One of them at a fund-raising drive in Los Angeles went to an old gentleman who had never given anything to the cause and he said, “Our records show that you earn $90,000 a year and we feel that you should be able to contribute.” And the old gentleman said, “Do you records also show that I have a widowed sister with four children who was left destitute; that my mother has no means of support and that my brother was disabled in the War and is unable to provide for himself?” Embarrassed, my friend said, “No, our records don’t show that.” “Well,” the old gentleman said, “I don’t give anything to them, so why should I give something to you?”
Seriously, I am happy to be here and to be able to participate, even if in a small way, in helping this successful drive for such a cause as the Red Cross. “Charity is still a noble word and our way of life has been founded on the idea of good causes maintained by free gifts freely given by free men. The necessity to preserve the idea has never been more important than at this moment of history.
There is a force abroad in the world that would replace compassion with the coercion of taxation, substituting for human kindliness the impersonality of government bureaucracy. No matter how good the intent of those who do this, they will, if given their way, produce in the end a dependent people and a dependent people can be manoeuvred, manipulated and controlled.
Charity is injurious unless it helps the recipient become independent of it. George Bernard Shaw, the great playwright, a Fabian, professed to believe in and support a social order which he said would provide equality of income or nothing. Now whether he had his tongue in cheek or not I don’t know, but in writing of that social order he envisioned, he said you would not be allowed to be poor, you would be forcibly fed, clothed, lodged, taught and employed whether you liked it or not. If it were found you had not the character or industry enough to be worth all this trouble, you might possibly be executed in a kindly manner. But while you were entitled to live, you would have to live well.
It is amazing how many people, including our own sons and daughters, are unable to grasp what Mr Shaw so smilingly offered as a new idea in human relationships was indeed nothing more than slavery. They see and they accept the promise of being fed, clothed, lodged, taught and employed with no thought of asking who will decide what they are allowed to eat and when; who would issue their clothing and whether possibly the clothing will be a uniform; or who will tell them where there are going to live or what they will be allowed to learn and what work will they be forced to do.
For a great many years — I suppose this began my interest in politics but never the thought that I would ever be in this capacity serving in public office — I spoke out warning against the silent encroachment of government as one by one it usurped the rights traditionally held to be the inherent possession of the individual. Now for seven years I have been a part of government — a funny thing happened to me on the way to the theatre!
My concern has grown even greater as I have learned at first hand how savagely and vindictively government will resist any effort to lessen or limit its power.
I am talking about government as an institution — all government. That great permanent structure that has the organic ability to grow on its own and which has never been known in all history to voluntarily reduce itself in size.
Government is nearest to eternal life
A government program is the nearest thing to eternal life you will ever see on this earth. In some dim beginning, man created government for its own convenience and it has been doings its best to become an inconvenience ever since. As government reaches out for more and more things to do, restrictions on individual freedom become an entangling web. If you were a born worrier you were born at the right time.
But an assortment of activists in one cause or another — protection of the consumer, of the environment or just the old bromide “big business and big labour require big government” — would have government take from business the prerogatives of management without, of course, assuming the responsibilities which frequently make many of you take to a tranquilliser.
For the second time in a century on almost a worldwide scale, this idea called “free enterprise” is under attack. You, as businessmen, are being blamed on a daily basis for many things you haven’t done and given very little credit for things you have done very well.
A political and economic mythology — widely believed — is combined with a lack of real understanding of how to make something which the people need and want and getting it to them at a reasonable price. You fill out voluminous forms required by government. In my country it takes an estimated 130 million man-hours each year and it adds tens of billions of dollars to the cost of production, all of which must be added to the price of the product.
Business is accused of having great power which it uses to influence government in its favour at the expense of the people. But you don’t feel very powerful and, if you are typical of businessmen elsewhere, you feel a little bewildered by it all.
In Washington no one today knows how many boards or commissions or bureaus there actually are but the Federal Register listing the regulations spawned by all these boards and commissions numbers 25,000 pages, almost as many as in the entire Encyclopaedia Britannica. Armed with these regulations, bureaucratic Lilliputians attack Gulliver, telling him that if the same price is charged for all his products, he is guilty of price-fixing; and, if he doesn’t charge the same price, he is guilty of unfair trade practice.
Government, we find, can be the most menacing when its purposes are beneficent. Public servants with noble intent, seeking sincerely to serve the citizenry, say, “Oh, how much more we could do for the people if only we had a little bigger budget and a little more authority.” They are not evil. They are sincerely motivated and really want to help. But they just do not realise that sometimes an ounce of government-issue blessing costs in liberty a pound.
Government has legitimate functions which it performs very well but outside of those legitimate functions government does nothing as well or as efficiently as the private sector. Government exists to protect us from each other but the trouble is it continues to try and protect us from ourselves. Government is a referee and it should not try to be a player in the game.
Has business stayed aloof from politics?
It is time to ask if we don’t get the government we deserve. Has business, as well as too many of the rest of us, stayed aloof from politics, thinking naively that if it does, politics will stay away from it? Well, it won’t. There can be no vacuum in public life. The people will run government or government will run the people. It is no wonder that business has become a whipping-boy for every demagogue who needs a cause to promote his own interests.
Why doesn’t business on some fine day, with the communications media available to business, say to the taxpayer, who is also an employee and who is also a customer of that business: “Those taxes that business pays don’t reduce the burden on the individual. They become a part of the price structure of the products that business sells.”
Why don’t we say to them that business collects taxes for government and it does so very efficiently. Only people pay taxes. And then perhaps we could say that business doesn’t mind collecting taxes so long as the people are not deceived by politicians and so long as the people know that they are paying those taxes when they buy the product, whatever the product may be.
We had better start exposing this political and economic mythology — and start exposing it soon. In my country recently a poll was taken of tens of thousands of college and university students. From two-thirds to three-fourths of the students answered a series of questions revealing that they put their entire faith in government. They believed that only government could resolve the problem of social inequity, that business was responsible for most of today’s problems and that government should be given more power to regulate and control every facet of business. And then 80 per cent of them answered a question that yes, they wanted less interference in their lives by government. And none of them saw any inconsistency in this.
The simple fact is that politics is too important to be left to politicians. We sit back hoping that some day someone else will make things right; that if we just wait somehow it will turn out all right. To do this is about as short-sighted as a man going into the poultry business without a rooster — he is placing a great deal of confidence in the stork.
There is a struggle going on in the world today for the hearts and minds of men and there can be no political freedom if there is not economic freedom — the right to private ownership, the freedom of choice, the right for a man to choose his profession or his occupation. In this struggle there are those who would have us believe that we can help the weak by weakening the strong.
It is time we recognised that Karl Marx did not take women out of the coal-mines in England a century ago — it was the steam engine and labour-saving machinery. This system of free enterprise is spark-plugged by the hope of economic reward and it has lifted more burdens from the backs of more people than any other system the world has ever known.
Right now, government needs your participation in public affairs. This means sharing your expertise and your management skill with government, lending your best manpower and not your cast-offs to government; for government by second rate men will be second rate government — and that’s a very expensive kind of government.
For almost a decade prior to 1967, my State of California had been guided by a philosophy that looked upon government as the provider of all good things. If it wasn’t the ultimate in the Welfare State, it was well on its way. Social reforms had been adopted without regard to fiscal responsibility. So, in 1967, as our administration took over, we found an almost insolvent government which was spending a million and a half dollars a day more than it was taking in. And since our State Constitution forbids a deficit, gimmicks and book-keeping tricks had been employed to forestall a tax increase as long as possible, particularly until after the 1966 election.
It seemed in those dark days when we first started our administration every passing day brought a new problem. I tried “Dial-a-Prayer” but they hung up on me. But I had a belief that people would like to help, if given a chance and if someone would only tell them how.
So we turned to the business and industrial leaders of our State. We asked them for the kind of men and women who would be willing to take a government position even though it cost them to do so.
Outside help saved millions of dollars
We twisted employers’ arms to lend us the kind of young men they hoped would some day be the president of their corporation — not the cast-off. We tapped the prematurely retired. We staffed our departments and our agencies and our secretariats with directors who were dedicated first of all to finding out if their own job was necessary and we found a few who found it wasn’t. And they were the first to tell us and returned to their own careers.
We had quite a turnover over the years as individuals had to return to those careers but they have been replaced by others like themselves, because business learned that people who returned to them after a stint in government came back broadened and much more valuable.
We went a step further. One day we gathered in a room what amounted to the professional and industrial leadership of our entire State. We informed them that what we were after was blood — their blood.
We outlined a plan calling for the greatest experts they could produce in a variety of fields to form task forces based on their expertise. They volunteered to a man and more than 250 of these very successful people gave an average of 117 days to government free of charge, going into every area to determine how modern business practices could be put to work to make government more efficient and more economical.
For example, hotel men went into our prisons and hospitals to check on the kitchens, the food buying, the laundry and the housekeeping chores. They returned to us at the end of this period with more than 1800 specific recommendations. More than 1600 of these recommendations have been implemented and the savings are hundreds of millions of dollars a year.
And lest my criticism of government sound like too much of a blanket indictment, let me say that, some civil servants who had thought no-one cared joined them enthusiastically in helping bring about improvements they themselves had long thought of.
In the decade previous to 1967, our State Government had been increasing in size two and a half times as fast as our increase in population. We were adding more than 5000 employees to the payroll every year.
Tax rebates followed cuts in expenditure
Today, after seven years, we have virtually the same number of employees as we had when we started; they are handling from 30 to 40 per cent workload increase and we have eliminated more than 29 boards and commissions. When one-time budget surpluses resulted from our economies, we returned them to the people in the form of rebates in their income tax. And this year we have hit the jackpot: we are returning some $800 million in a rebate that totally forgives the income tax at the lower end of the earning scale and graduates it down to a minimum discount at the top of the earnings scale of 20 per cent.
One senator said to me that he considered giving the money back to the people an unnecessary expenditure of public funds.
Charity and the possible replacement of that by government welfarism, is the area where those who favour the planned economy and compulsory redistribution of the people’s earnings make their greatest gains. Any criticism of welfare is met with the charge that the critic lacks compassion for the less fortunate. And so social reforms have been the biggest cost item in almost every government and every social structure we have today.
In California, our welfare costs were mounting four times as fast as our increase in revenue. In good times and bad, we were adding 40,000 new people a month to the welfare rolls. Sixteen percent of all the people in the United States on welfare were on welfare in California. We found we were sending cheques to welfare recipients all over the world, even to one living in Russia.
Abuses of welfare payouts
A multitude of regulations — Federal and State — made moral fraud technically legal. Regulations to protect the sensitivity of the recipient had forced us to accept his declaration of need without checking his truthfulness. One newspaper reporter managed to get on welfare four times under four different names on one day in the same office. We had welfare recipients who were the second and third generations of their families to be on welfare. It was a system destroying the very moral fibre of the people. We were spread so thin caring for the greedy as well as the needy, that we could not properly provide for those who truly had no source of livelihood other than welfare.
Once again we turned to the citizenry. A task force evolved the most comprehensive proposals for welfare reforms every attempted in our nation. When the proposals met with legislative resistance, we turned once again to the people and the business community took the lead in mobilising a state-wide drive to have public opinion register itself on the legislature. They didn’t exactly make the legislators see the light but they certainly made them feel the heat.
“Freedom always rests in the individual”
Today, there are 387,000 fewer people on welfare; the deserving needy have been given a 30 percent increase in their grants and in this last year alone, we have found more than 20,000 jobs for long-time welfare recipients who are heads of families.
Unless government is peopled by those who believe in freedom in the market-place, we risk being governed by those who would substitute coercion for persuasion. There are many places in the world today where everything that is not compulsory is prohibited.
Sometimes I wonder if you realise how strong and how powerful you are if you would only take the interest to be that powerful. In California every year our legislature handles about 5000 bills and they pass about 1200 of them. If in any one of these seven years they had all been lost on the way to the printer, it would not have affected the life-style of an average Californian one bit. As a matter of fact, I have often thought that if we closed up shop and all of us went home, it would be weeks before anyone would miss us. But if you stop what you are doing for 24 hours, the world grinds to a halt.
It has been said that if we lose this way of ours — this thing we call “freedom” — history will record with the greatest astonishment that those who had the most to lose did the least to prevent it happening. That must not be said of us. Freedom is such a fragile thing and mankind has known so little of it. The truth is that you and I have probably known more of it than most.
It was once said of us that we — our generation — had a rendezvous with destiny and it is time we asked what that rendezvous might be. Will we spend our sunset years telling our children and our children’s children what it was like when men were free? And what will our answer be if some day we are asked by those children, “Where were you when freedom was lost? What was it that you found that seemed more precious to you than freedom?”
I do not think that will be our destiny. I do not think it is our destiny to preside over the great night-fall for mankind. I think if we will remember that freedom rests, and always will, on the individual — on individual integrity, on individual effort, on individual courage and on individual faith in God — then we will have met the challenge of our rendezvous with destiny.
